The gap widens in Sydney’s property market, as premium properties continue to rack up big gains whilst those in the fringes weaken.
Properties in Sydney saw an overall growth in value of 2.29% during September whilst country NSW only achieved 0.11%, but this wasn’t entirely representative of the market as a whole.
The top performers in terms of unit sales were mostly based far away from Sydney’s CBD, with Jerrabomberra in south-east NSW topping the list with 6.14% growth for the three months to September, and 9.5% year-on-year.
Rental properties in Australia’s biggest city remain very tight thanks to the shrinking supply of available properties. Sydney houses achieved a 23.94% increase in rent over the past 12 months whilst units rose slightly higher at 24.59%.
Tim Lawless, RP Data’s director of property research says that in terms of price growth, the most divided market seems to be Sydney. While the affluent areas are experiencing growth, much of the remaining market is experiencing zero growth and in some cases negative growth.
“A significant proportion of Sydney homebuyers have received very strong asset and dividends from Australia’s strong economic growth over the past decade,” he says.
“These buyers have not reached borrowing capacity and competition and competition for properties in Sydney’s inner city, North Shore, Northern and Southern Beaches will continue to produce excellent growth in these areas barring a significant external economic event.”
In contrast, Lawless points out that many homeowners in Sydney’s outer suburbs and Central Coast are experiencing considerable mortgage stress. He adds that whilst there are currently many properties available in the market, potential buyers are at the limit of their borrowing capacity. Consequently, property prices are stagnant or falling.
Matthew Hartman, head of research at Rismark International adds that developers are not building many new properties in the outer suburbs of Sydney and Melbourne because the return on investment is simply not there. “There will only be sufficient incentive to do so when prices fall and/or building cost significantly decrease,” he says.
Kim Quick, team leader – Herron Todd White Quick agrees that overall the Sydney market has distinct levels with prestige and premium property – lower North Shore, Eastern suburbs and some inner west localities – showing increasing demand and increase in value levels.